What happens to market equilibrium if demand shifts?

When demand shifts, it means that there has been a change in the quantity of a good or service that consumers are willing and able to purchase at various price levels. This shift can occur due to factors such as changing consumer preferences, income changes, or the price of related goods.

As demand increases, the demand curve shifts to the right, indicating that at every price, consumers want to buy more of the good. Conversely, if demand decreases, the curve shifts to the left. This movement of the demand curve affects the intersection point of supply and demand, which is the market equilibrium.

In response to the shift, suppliers typically adjust their production levels, leading to changes in both the equilibrium price and quantity in the market. For example, with a rightward shift in demand, consumers are willing to pay higher prices for more quantity, prompting suppliers to increase their output. This interaction ultimately results in a new equilibrium price and quantity where supply meets the new level of demand.

Thus, the correct answer highlights that a demand shift can indeed lead to new price and quantity dynamics in the market.